Beyond Prime Custody: Custody Bank Services for Alternative Asset Managers

Finadium
December 2016

Finadium reports are distributed primarily by subscription. If you are a research subscriber, please log in to download a copy of this report. Otherwise, please contact us at info@finadium.com.

As prime brokerage balance sheets continue to respond to global and domestic regulation, custodian banks have captured financing-related business with alternative asset managers. While prime custody has been a fixture of custodian services for the last seven years, the new wave of service provision includes access to securities loans for short selling and the ability to lend excess long positions to generate cash for margin purchases. These business lines overlap with the core services offered by prime brokers.

This Finadium Executive Briefing evaluates both established and new services offered by custodian banks to alternative asset managers. From partnerships with prime brokers to rolling over excess long balances to balance-sheet friendly securities lending solutions, are custodians showing us the future of prime brokerage?

This Executive Briefing has been written for alternative asset managers, banks and service providers to understand the business models of custodians offering custody and financing services. It may also be useful to banks evaluating the potential for balance sheet savings in their prime brokerage franchises.

This report is 14 pages with 5 exhibits.

TABLE OF CONTENTS
■ Executive Summary

■ The Range of Services Offered by Custodian Banks
– Safeguarding of assets
– Generating cash from securities lending
– Securities lending for short sales
– Brokerage services

■ Market Sizing

■ Future Growth Prospects

■ About the Author

■ About Finadium